Hibbett Sports, Dick's Sporting Goods, and Big 5 Sporting Goods might all trade higher in 2014, but one company in particular is cheap with a catalyst that could lead to very large returns.

Dick's Sporting Goods(NYSE:DKS) proved to investors that despite rough weather in the fourth quarter, consumers are still gravitating to sports retail. And while it and Hibbett Sports (NASDAQ:HIBB) have enjoyed solid growth, Big 5 Sporting Goods(NASDAQ:BGFV) is rolling out a new service that may level the playing field.

Two market favoritesFor the last five years, Dick's and Hibbett have both done well to capitalize on growth opportunities while maximizing margins. While both companies operate in the same industry, they have different operational approaches: Dick's is larger with stores averaging 30,000 square feet, while Hibbett operates smaller retail stores of 5,000 square feet in office parks and malls.

Yet, the similarity is that both stocks have seen five-year gains in the neighborhood of 300% and double-digit annualized revenue growth for the last three years.

This growth was put on further display when Dick's reported earnings last week, showing an unexpected 7% increase in comparable-store sales.

Big 5 under the radarWith that said, Big 5 is a competitor that has flown under the radar during the last five years but has seen a recent string of operational improvements.

Over a three-year period, the company's annualized growth has been a mediocre 1.7%, but for 2013 the company's on pace to report full-year sales growth of 6.1%. While the company's growth is expected to slow to 4.5% in 2014 -- Hibbett and Dick's sub-10% growth level is expected to continue -- there is one catalyst for the year that suggests growth for Big 5 might surprise to the upside.

One catalyst makes Big 5 interestingLike most retailers, Big 5 has an e-commerce channel. However, the company's online store is limited to allowing consumers to purchase goods based on product availability at specific stores. As a result, Big 5 loses many customers when it is unable to find goods at nearby stores.

However, in 2014 Big 5 will roll out a direct-to-consumer web-store, meaning its site will now use the company's total inventory channel to find and ship products to the consumer. This is a huge deal for the company and a reason to suggest that 2014 could spark revenue growth that's similar to its peers.

For example, Dick's does not provide exact revenue figures for e-commerce, but we do know that online sales are approaching 10% of the company's total revenue and growing rapidly. Internet Retailer estimates that Dick's online sales are growing at more than 50% annually and are responsible for 40% of its year-over-year growth.

Thus, if Dick's direct-to-consumer online strategy has been this successful, then there is at least reason to believe that Big 5 could see unexpected success. Furthermore, if e-commerce is responsible for this degree of Dick's growth, it would explain why Big 5 has lagged its peers.

With that said, there are many reasons that e-commerce channels for sports retailers would be strong and a bit protected against the likes of Amazon.com. Mainly, products like guns are not sold online and others like fishing poles are sold sparingly, but with sports retailers, such products can be ordered online and picked up in-store or delivered. This gives sports retailers an advantage against the wrath of Amazon.

Big 5: Also a recovery storyIn addition to having an under-the-radar catalyst in 2014, Big 5 remains a recovery story that is cheap as well.

In early 2012, selling, general, and administrative expenses accounted for more than 30% of total revenue; today it's closer to 27% of revenue. Also, during the last two years, the gross margin has increased consistently, just about on a quarter-to-quarter basis, likely due to the improvements in supply and logistics management.

Yet, with an operating margin of 4.5%, Big 5 still operates at a 50% discount to its peers, meaning there is room for further improvements.

Finally, there is the question of valuation.

Company

Forward P/E Ratio

Price/Sales Ratio

Big 5

10.5

0.35

Hibbett

16.7

1.06

Dick's

18.8

1.74

Clearly, Big 5 is trading with a huge discount to its peers, at just 10.5 times next year's earnings. While its lack of fundamental growth makes it deserving of a discount, the fact that its e-commerce business had been nearly non-existent serves as a reason to be optimistic in 2014.

Final thoughts Dick's fourth quarter earnings shows growth during one of the worst winters of the last two decades, which consequently has been a rough retail environment. Hence, investors have to like the momentum of this industry moving forward into 2014.

However, Big 5 looks particularly strong. Not only does it have the catalyst of a direct-to-consumer web-store, but Big 5 is a West Coast company, having 50% of its stores in California. Therefore, it shouldn't be as negatively affected as most retailers from the winter.

Overall, these factors combined with its valuation signals that Big 5 not only looks strong for 2014 but also short-term, which is something investors love to hear.

Author

Brian Nichols is the author of "5 Simple Steps to Find the Next Top-Performing Stock: How to Identify Investments that Can Double Quickly for Personal Success (2014)" and "Taking Charge With Value Investing (McGraw-Hill, 2013)". Brian is a value investor, but emphasizes psychology in his analysis. Brian studied psychology in undergrad, and uses his experience to find illogical value in the market. Brian covers technology and consumer goods for Motley Fool. Brian also updates all of his new and current positions in his Motley Fool CAPs page. Follow Brian on Twitter and like his page on Facebook for investment conversations and recent stories. Follow @bnichols9883